Why can't I refinance my home loan since it was never reaffirmed? 15 Answers as of February 24, 2014

Filed bankruptcy 3 years ago and my lawyer didn't reaffirm my loan. Why is it that he didn't reaffirm my loan. What is the difference between reaffirm and not reaffirmed. It doesn't show on my credit report.

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GARCIA & GONZALES, P.C. | Richard N. Gonzales
I advise my clients not to sign real estate reaffirmation agreements in case you want to walk away from the loan (home) in the future. I don't see the problem with refinancing the loan. A new mortgage company is not going to care one bit about that issue. If you are in Colorado, call Jim Spray with the Loan Office in Arvada. If you are not in Colorado, shop the loan around. If you qualify in all other regards, this will not be an issue with an experienced mortgage lender.
Answer Applies to: Colorado
Replied: 2/24/2014
R. Steven Chambers PLLC | R. Steven Chambers PLLC
I don't know why you can't refinance. It is probably that you don't meet the credit requirements of the bank. If you are dealing with the same bank it is most likely because by not reaffirming there is no personal obligation to be refinanced. Reaffirming means you become personally obligated to repay the money even after you receive your discharge. That means that if you default not only can the bank foreclose on the property but if there is a deficiency after the foreclosure sale you are responsible for that. If you don't reaffirm, you have no personal responsibility, but the bank can still foreclose on the house. As to why your attorney didn't reaffirm, I usually recommend to my clients that they not reaffirm a mortgage. You get the best of both worlds. The personal liability is gone through the discharge but you can continue to pay and live in the house. If in the future you find you can't continue to make payments you can walk away from the house because the debt has been discharged. There are some drawbacks to this so I always explain to my clients what those drawbacks are. In general, I would say the best advice to a client is that they should not reaffirm a mortgage. However, in specific cases that might change. I can't say why your attorney didn't have you reaffirm but my guess is he was following the general rule that it is best not to reaffirm.
Answer Applies to: Utah
Replied: 2/18/2014
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
This is the new "dirty tick" by the lenders. First, your loan was not required to be reaffirmed. Second, there a way around this. First you have to file a motion to reopen the case and then you file a motion to have the court declare that refinancing is not a violation of the discharge injunction. We call that a "comfort order".
Answer Applies to: California
Replied: 2/13/2014
Idaho Bankruptcy Law | Paul Ross
There is no reason why you cannot refinance your home. It is simply the lender is misreading the law. It is very rare that a reaffirmation agreement is even provided on real property, even more rare that most attorneys will recommend signing the reaffirmation agreement. The discharge in your case prohibits the mortgage company from attempting to collect, that means statements cannot be sent, the debt will not be reported to credit, and if there is ever a deficiency they cannot collect against you. A reaffirmation changes all of those. The bank is your issue, not your bankruptcy or the attendant attorney. Try a different lender.
Answer Applies to: Idaho
Replied: 2/13/2014
Stuart P Gelberg
Stuart P Gelberg | Stuart P Gelberg
You can refinance without having reaffirmed. Reaffirmation was not in your best interests, was not required and is not authorized by law. You can be denied a loan modification.
Answer Applies to: New York
Replied: 2/13/2014
    Marc S. Stern
    Marc S. Stern | Marc S. Stern
    Because your lender is playing games. There is no requirement that you reaffirm. The usual problem is a failure to report. In that case each year request an audit of file. File that as a contest with the credit reporting agencies. That solve that problem.
    Answer Applies to: Washington
    Replied: 2/13/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    Lawyers don't reaffirm debts, debtors such as you are the only ones who can reaffirm debts. Reaffirming a real estate loan is a pointless and risky thing to do. Reaffirming is agreeing to pay the loan and any deficiency should a foreclosure later take place. Not reaffirming doesn't prevent someone from refinancing, but it may prevent you from refinancing with your current lender. All mortgage companies are more picky than they used to be about qualifying someone for a mortgage loan. Check with your local credit union for more information on the requirements to refinance.
    Answer Applies to: Nevada
    Replied: 2/13/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    You are asking a while lot of different questions here. First of all, there is no legal reason at all why you can't refinance a loan that was not reaffirmed. If your current lender will not work with you then look for another one. Second, you lawyer is not the one who would have reaffirmed anything it would have been you. In my jurisdiction, no lawyer I know if will encourage their client or sign off on a mortgage reaffirmation unless there is significant equity in the property and there are significant favorable changes offered by the lender as a part of such an agreement. Reaffirmations are not required for mortgage loans and they are almost always a really bad idea. A reaffirmation agreement effectively takes the loan out of your bankruptcy discharge. Without an agreement the loan is discharged but the lien remains against the property. As long as you make the payments and stay current you get to keep the home. If payments fall behind and a foreclosure takes place the lender cannot come after you for any deficiency balance. If you have signed and filed a reaffirmation agreement with the bankruptcy court then the debt is not discharged and if a foreclosure takes place you may still be obligated for any deficiency left on the loan. The fact that your mortgage is not being reported to credit bureaus is correct the debt is discharged. You can, however, request information about your payment history from the lender and use that to demonstrate to a potential new lender that you have been making regular, on time payments.
    Answer Applies to: Colorado
    Replied: 2/13/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    If you do not reaffirm the debt then you have not "repromised" to pay the debt. If you default on the note, the bank cannot sue you for the deficiency if any upon foreclosure. A deficiency is the balance due on the note after sale of the property if the property is worth less than the amount owed. Most attorneys will discourage their clients from signing a reaffirmation agreement for this reason. Since you did not sign a reaffirmation agreement, the mortgage shows as being discharged and will not show on your credit report. You can refinance the loan through another bank.
    Answer Applies to: Nevada
    Replied: 2/13/2014
    Patrick W. Currin, Attorney at Law | Patrick Currin
    Mortgages that are not reaffirmed won't be reported on credit. The reaffirmation process involves a hearing and is not necessary if you wish to keep paying your existing mortgage. If it were me, I would have asked for fairly substantial charge for a reaffirmation. All that doesn't mean you cannot refinance, but your credit score and the time from bankruptcy may make it impossible or difficult to to lending practices and regulations.
    Answer Applies to: California
    Replied: 2/13/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    To reaffirm is to acknowledge that you still owe the bank the debt and are liable for that debt. Many judges will not let you reaffirm mortgage debt and it would be a discharge violation of the bankruptcy code to report payments after bankruptcy since they are not allowed to solicit payment for a discharged debt.
    Answer Applies to: New York
    Replied: 2/13/2014
    Havkin & Shrago | Stella Havkin
    Mortgages are not reaffirmed unless there are special circumstances and courts will not sign off on an order of reaffirmation without such special circumstances. However, nothing prevents you from obtaining a new loan for the property.
    Answer Applies to: California
    Replied: 2/13/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    You didn't reaffirm your loan because in Michigan you don't have to reaffirm mortgages like you do cars or furniture. That is also why it is not showing up on your credit report. You can walk away from your home if you decide you can't afford it and the mortgage company cannot try to collect the debt from you. If you want it reported on your credit report, call the credit reporting agency and dispute that you haven't been paying it. They then check with the mortgage company and have to correct within 30 days. If your mortgage company won't refinance it, go to another one who will.
    Answer Applies to: Michigan
    Replied: 2/13/2014
    Law Offices of Daniel J Winter
    Law Offices of Daniel J Winter | Daniel J Winter
    The short answer is that it is almost never a good idea to reaffirm. Reaffirming makes you personally responsible on the note for the house. If you want your payments to show up on your credit report, you might need to send copies of your payment history in to the lender. Yes you can refinance, but you should shop around to find a lender who will do that after showing them your payment history.
    Answer Applies to: Illinois
    Replied: 2/13/2014
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    Need to open case and file reaff.
    Answer Applies to: Florida
    Replied: 2/14/2014
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